the economics of money, banking, and financial markets

(Sean Pound) #1
829 $
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  1. Advocates of nondiscretionary policy emphasize the importance of a constant money growth
    rate rule more than the balanced-budget amendment or restrictions on union power because
    ____.
    A) they regard excessive money growth as the cause of inflation
    B) they believe that excessive government spending, not excessive monetary growth, is the cause
    of inflation
    C) they believe that while unions cause inflation, they are too politically powerful to deal with
    D) they regard high tax rates as the cause of inflation
    Answer: A
    Diff: 2 Type: MC Page Ref: 628
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  2. Advocates of nondiscretionary policy contend that a policy of shifting the aggregate demand
    curve will be costly because it produces more volatility in both the price level and output. Thus
    they favor ____.
    A) a policy of variable money supply growth
    B) supply-side policy
    C) demand-management policy
    D) a constant-money-growth-rate rule
    Answer: D
    Diff: 2 Type: MC Page Ref: 624
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  3. A credible, nonaccommodating policy rule has the ____ that it makes a cost-push by
    workers ____ likely and thus helps to reduce the output loss from controlling inflation.
    A) advantage; less
    B) advantage; more
    C) disadvantage; less
    D) disadvantage; more
    Answer: A
    Diff: 2 Type: MC Page Ref: 624
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates



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